Bill rate vs pay rate: what the agency pays your electrician

The bill rate is what you pay the agency. The pay rate is what the electrician makes. If the agency quotes a markup, his pay is the bill rate divided by (1 + markup). If it quotes a margin, his pay is the bill rate times (1 minus margin). On an $87.50 bill rate, "30%" means $67.31 an hour as a markup and $61.25 as a margin.

That $6 gap is why you never take "30%" at face value. Once you have his real wage, you can price the agency against putting him on your own payroll.

01The two formulas

Markup is a percent on top of his wage. Margin is a percent of your bill rate. Same word on the phone, different money.

• Markup: pay rate = bill rate ÷ (1 + markup). At 30%: $87.50 ÷ 1.30 = $67.31.
• Margin: pay rate = bill rate × (1 minus margin). At 30%: $87.50 × 0.70 = $61.25.

Going the other way, if the agency tells you what he makes:

• Markup = (bill rate ÷ pay rate) minus 1
• Margin = (bill rate minus pay rate) ÷ bill rate

Insight Global, a staffing firm, puts the definitions plainly: the bill rate is "the total amount a client pays a staffing agency for a worker's services," and the pay rate is "the wage a worker earns." Everything in between is the agency's costs and profit.

02Markup vs margin on an $87.50 bill rate

The higher the percent, the wider the gap between what the two readings put in his pocket.

At 40%, the two readings are $10 an hour apart. Over a 3-month job at 40-hour weeks (520 hours), that's $5,200 per hand the electrician either makes or doesn't.

To swap one for the other:

So an agency that says "we run a 40% margin" is charging a 66.7% markup. Margin is a normal way to keep books. You just need to know which one you're hearing.

03How the math gets mixed up out loud

Markup and margin get blended on calls all the time, and the numbers that come out don't add up.

We've heard a quick percent of an $87.50 rate worked out loud on a call and land on a number that matched neither reading. On that rate, 30% is $20.19 an hour as a markup and $26.25 as a margin. Anything else is a guess. Nobody's lying. It's easy to grab a number on the phone with a job to run.

Fix it by doing the math yourself, from the bill rate on the invoice, with the formulas above. If the agency won't confirm which one it means, that's your answer about how open the rest of the deal will be.

04What one contractor was told, and what he wanted

Agencies will often tell you the hand's base rate. What you really want to know is whether that rate is any good.

One national electrical contractor told us how it goes: "They'll give us the base rate of what the [journeymen] are making, but I want to see what I'm having to pay with the market."

That's two separate checks.

1. Is the base rate real? Back it out of the bill rate with the formulas above. If the agency's stated wage and its stated percent don't land on the bill rate on your invoice, ask why.
2. Is the base rate competitive? Compare it to what licensed journeymen make where the job is. The BLS Occupational Outlook Handbook puts the national median for electricians at $30.38 an hour (May 2025), and the top 10% earned more than $108,510 a year, about $52.17 an hour. Those are BLS OEWS numbers: straight time, and they include apprentices, so a licensed journeyman should sit above the median. Local job ads and your state's wage data tell you more. How to tell if your journeyman pay rate is competitive walks through it.

A low base rate under a high bill rate is the worst of both. You pay top dollar, and the hand has every reason to take the next call for more money.

05Run it backwards on an apprentice

When the bill rate doesn't move with the card, the markup does.

The same contractor told us an agency billed about $87.50 an hour, plus per diem, for apprentices. Example only: say those apprentices were paid $30 an hour.

• Markup: $87.50 ÷ $30 minus 1 = 1.917, or about 192%.
• Margin: ($87.50 minus $30) ÷ $87.50 = 0.657, or about 66%.

You don't know what those apprentices made. Neither did the contractor. That's the point. If you're paying a journeyman bill rate, get the pay rate and the license class in writing. How much agencies mark up an electrician has the normal ranges to compare against.

06Why you can't just ask the hand

Many staffing agreements bar you from talking pay with the agency's worker.

One staffing firm's published terms say the client must "not make any offer or promise relating to Assigned Employees' compensation or benefits." That's about making offers, not asking questions, but plenty of hands won't tell a customer what they make anyway. The clean way to get the number is from the agency, in writing, before he starts.

07The request to make in writing before you sign

Send this to the agency and get the answers back in writing, then put them in the agreement.

Before we sign, please confirm in writing for each person you send: 1. His hourly pay rate and license class (journeyman, apprentice, residential or other), with the issuing state. 2. The bill rate, and whether your percent is a markup on pay or a margin on the bill rate. 3. What's included in the bill rate: payroll taxes, workers' comp, general liability, any benefits. 4. The overtime and double-time bill rates. 5. How per diem and travel are billed: at cost, or marked up, and by what. 6. What happens to the bill rate if his pay rate changes. 7. Your conversion fee, how it drops by hours, and how long it applies after the assignment ends.

Items 4 and 5 matter more than they look. Robert Half's public staffing terms bill overtime at 1.5 times the normal bill rate, so on 6-10s the markup rides on 20 extra hours a week. And per diem marked up by an agency is per diem you pay twice for.

Then put the answers into the contract itself. What to put in an electrical staffing agreement covers the clauses around it, like send-home rights and who carries comp.

If you'd rather see licensed journeymen's real numbers and hire them onto your own payroll, apply here and we'll see if we can put 5 licensed electricians in front of you in 14 days.

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